Research Handbook on State Aid in the Banking Sector
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Research Handbook on State Aid in the Banking Sector

Edited by François-Charles Laprévote, Joanna Gray and Francesco De Cecco

The Research Handbook on State Aid in the Banking Sector brings together experts in state aid and in financial regulation, drawn from legal academia, legal practice, economics, and from the EU and EEA institutions to shed light on this relationship. The editors and expert contributors do this by elucidating key concepts that underpin the application of state aid law to banks, and by considering specific aspects of the interface between state aid and financial regulation. The Research Handbook's analysis is complemented by a number of key country-based case studies, and by a concluding section which takes stock of the Banking Union’s package of legislative/regulatory reforms and reflects on the possible future role of state aid in this sector.
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Chapter 7: Preserving cross-border banking in the face of the crisis: State aid policy under the financial trilemma

François-Charles Laprévote and Sven Frisch

Abstract

When the financial crisis struck, the European Union lacked a comprehensive supranational regulatory and bank resolution framework. While EU-based banks operated on a cross-border basis, crisis management and resolution tools remained national in scope. Using the concept of the ‘financial trilemma’, we argue that the Commission’s crisis-time State aid policy sought to fill this void by both leaving Member States enough leeway to restore financial stability and coordinating their interventions to preserve cross-border banking, in line with constitutional market integration objectives. But the limits of State aid law and an often reactive approach to national interventions meant that the scope, overall coherence, and effective contribution of the Commission’s State aid decisions to market integration objectives varied from case to case.

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